What is Landed Cost Management?
Landed
Cost Management Helps a Company to record and analyze the accurate cost break
up of a purchased item. This is done by adding the shipping, insurance,
handling, taxes, and storage cost of the item.
What was happening before LCM?
Before LCM all
the Additional Cost such as transportation or handling where added to Material
Overhead account. The overheads cannot be vendor or shipment specific. Overhead
Rates are same Regardless of Shipping Point and Receiving Points.
What Happens in LCM?
LCM
Provides More Control to Estimate and Accrue the Additional Cost for Specific
Shipments. LCM uses information from PO along with formulas in advanced pricing
to add cost factors such as Freight, Tax, Insurance, and Handling. The Cost can
be applied to a Specific Item in a Shipment (Customs Duty) or the Entire
Shipment (Freight).